The point of tangency between a consumer's budget constraint and his or her indifference curve represents
A)complete satisfaction for the consumer.
B)the equivalence of prices the consumer pays.
C)constrained utility maximization for the consumer.
D)the least he or she can spend.

Question

Quizplus · Accepted Answer

The point of tangency between a consumer's budget constraint and his or her indifference curve represents constrained utility maximization for the consumer. At this point, the consumer is maximizing his or her utility, given the budget constraint. This means that the consumer is getting the most satisfaction possible, given the prices and the budget constraint. Therefore, the correct option is C.

The Point of Tangency Between a Consumer's Budget Constraint and His